Rules on Annual Leave and Carry Over 2024
As we’re well and truly in the middle of holiday season and the holiday year for many employers, we thought we’d share a timely reminder about some recent changes to annual leave and holiday carry over. You’ll be able to avoid any potential issues in advance of the end of year rush to get holidays in, and where there can be lots of conversations or issues about carrying forward holidays to the next calendar year.
You may recall that on 01 January 2024, The Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023 (“ER Regulations”) came into force, and made several changes to holiday pay provisions. You can read our article detailing the new provisions for rolled-up holiday pay for irregular hours and part-year workers along with the definition of a week’s pay.
In addition to introducing new measures, the ER Regulations also took the opportunity to restate the effect of a series of EU case law, to clarify an employee’s right to carry over annual leave from one holiday year to the next.
The basic principle of ‘use it or lose it’ remains in general terms, in that an employee should take their annual leave during the annual leave year in which it was accrued. If the employee chooses to not take their annual leave entitlement, this will be lost at the end of the annual leave year. No payment for accrued but untaken leave will be made in these circumstances.
The ER Regulations have however clarified that an employee has the right to carry over annual leave if any of the following applies to their circumstances:
- They are unable to take some or all of their leave as a result of taking family friendly leave, for example maternity leave. This can be carried into the following leave year;
- They are unable to take some or all of their leave as a result of a period of sick leave. This can be carried over and taken within 18 months of the end of the leave year in which it was accrued;
- In any leave year, their employer fails to:
- Recognise their right to take paid annual leave;
- Give them reasonable opportunity to take their annual leave; or
- Inform them that any leave not taken by the end of the annual leave year will be lost.
- In these cases, leave can be carried forward to be used by the end of the leave year in which the employer no longer fails in their obligations in this respect.
The above is not necessarily a change in legal position, but instead confirms the application of case law into our legislation.
The technical drafting and application of the legislation remains to be challenged through the Employment Tribunals. Being ‘unable’ to take leave due to family friendly leave is not defined in the legislation. The current position is that if there is sufficient time for an employee to take their leave between returning from family friendly leave and the end of the annual leave year, then this should be taken as normal – and the right to carry over does not kick in.
It is always best when dealing with employees on a period of family friendly leave to have open and transparent discussions, ahead of time, about the employee’s annual leave accrual and the options open to them in relation to this, rather than waiting until their return or the end of the annual leave year when options are a lot less limited. Early discussion can avoid unnecessary argument further down the line.
Of course, the vast majority of employers recognise the need and requirement for their employees to take appropriate rest and recuperation away from work, and enable this wherever possible. An employer’s ‘use it or lose it’ policy is often contained in their staff handbook. Again, the general position is that this would satisfy the notification requirement, but could be open to challenge in the event the handbook is not readily accessible to employees for example.
There is no harm in an employer sending a general reminder to all their employees, perhaps in the middle of the annual leave year, reminding their employees of the general position that annual leave not used by the end of the annual leave year will be lost and not carried over except in accordance with any relevant legal provisions.
Holidays and annual leave entitlement can be a bone of contention for many employees and employers however often the issues that arise could have been addressed amicably much earlier in the holiday year if matters were simply discussed openly. If you have any questions about holiday entitlement or need guidance on how to deal with a holiday entitlement matter, our team are here to help.
We advise on a variety of employment issues for both employers and employees. Please speak with one of the Employment Law team on 01246 555 111 or contact:
Amy Hallam
Head of Employment
t: 0114 349 6989
e: amy.hallam@brmlaw.co.uk
Ellie Leatherday
Associate
t: 01246 564002
e: ellie.leatherday@brmlaw.co.uk
Jade Taylor
Trainee Solicitor
t: 01246 560587
e: jade.taylor@brmlaw.co.uk
